SCF Waxler Marine, L.L.C. v. Aris T M/V, et ( 2018 )

Case: 17-30805 Document: 00514703084 Page: 1 Date Filed: 10/30/2018
REVISED OCTOBER 30, 2018
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 17-30805
United States Court of Appeals
Fifth Circuit
FILED
SCF WAXLER MARINE, L.L.C., August 29, 2018
Lyle W. Cayce
Plaintiff Clerk
v.
ARIS T M/V,
Defendant
-----------------------------------
In re: In the Matter of the Complaint of Cenac Marine Services, L.L.C., as
Owner and Operator of the M/V LORETTA CENAC, BARGE CTCO 338,
BARGE CTCO 339, and BARGE CTCO BARGE 357B, for Exoneration From
or Limitation of Liability
CENAC MARINE SERVICES, L.L.C., etc.
Petitioner
VALERO REFINING - NEW ORLEANS, L.L.C.; MOTIVA ENTERPRISES,
L.L.C.,
Third Party Plaintiffs Claimants - Appellants
v.
CONTINENTAL INSURANCE COMPANY; AGCS MARINE INSURANCE
COMPANY; NEW YORK MARINE AND GENERAL INSURANCE
COMPANY; STONINGTON INSURANCE COMPANY; NATIONAL
SPECIALTY INSURANCE COMPANY; LLOYD'S SYNDICATES,
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No. 17-30805
Third Party Defendants - Appellees
v.
SHELL CHEMICAL, L.P.,
Claimant - Appellant
Appeals from the United States District Court
for the Eastern District of Louisiana
Before STEWART, Chief Judge, and JONES and ENGELHARDT, Circuit
Judges.
CARL E. STEWART, Chief Judge:
A stream of litigation followed a marine accident that resulted in
damages estimated to exceed $60 million. The underlying fault or liability for
that accident is not at issue on appeal. Rather, Valero, Shell, and Motiva ask
this court to resolve whether the excess insurers of one of the involved vessels
may limit their liability to that of the insured vessel. On a partial motion for
summary judgment, the district court held that the Protection and Indemnity
policy covering the vessel has a Crown Zellerbach clause thereby permitting
the excess insurers to limit their liability to that of the insured vessel.
Valero, Shell, and Motiva timely appealed, asserting that this court has
jurisdiction to hear an appeal of that interlocutory order under 28 U.S.C.
§1292(a)(3). Because we lack appellate jurisdiction, we DISMISS.
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I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY
On January 31, 2016, bulk carrier Aris T collided with a tank barge, a
towing vessel, and two facility structures along the Mississippi River upriver
from New Orleans. Prior to the accident, the Aris T was proceeding upriver as
two towing vessels, the Elizabeth M. Robinson and Loretta G. Cenac, were
moving downriver toward their respective destinations. Both towing vessels
were pushing ahead three loaded tank barges, each barge 300 feet long and 54
feet wide. Despite communications between the captains of each vessel about
facilitating the Loretta G. Cenac’s attempted pass of the Elizabeth M.
Robinson, an accident occurred after the Aris T struck the portside of an empty
tank barge which in turn struck another tank barge. The barges were
connected by the stern to the bow of towing vessel SCF Vision moored at a dock
owned by Valero Refining – New Orleans (“Valero”). In the aftermath of this
initial collision, the Aris T, still moving upriver, struck another towing vessel
as well as multiple berths owned by Shell Chemical, L.P. (“Shell”) and Motiva
Enterprises (“Motiva”). Both tank barges, the facility dock, and the SCF Vision
sustained damage.
On February 2, 2016, SCF Waxler Marine, LLC, owner and operator of
damaged towing vessel SCF Vision, filed suit against the Aris T in the Eastern
District of Louisiana. Soon thereafter, Valero, Shell, and Motiva also filed
actions against the Aris T. Seeking to limit its liability for damages resulting
from the accident, the Aris T filed a Verified Complaint in Limitation under
the Limitation of Liability Act (46 U.S.C. §§ 30501–12), arguing that it was not
at fault for the accident. The vessel most relevant to this appeal—the Loretta
G. Cenac through its owner Cenac Marine Services, LLC (“Cenac”)—similarly
filed a Verified Complaint for Exoneration from or Limitation of Liability. The
district court consolidated that action along with others related to the accident.
The Exoneration Complaint sought declaratory relief from the district court
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providing that Cenac was not liable or, if found liable, that its liability be
limited to the value of Cenac’s interest in the vessels involved—$14,602,365
(value of the vessels plus freight).
Louisiana’s Direct Action Statute permits persons sustaining damages
in accidents occurring in Louisiana to bring direct actions against insurers of
the individual alleged to have caused the accident. LA. REV. STAT. ANN.
22:1269. Subject to a handful of exceptions not applicable here, a direct action
may not be brought against the insurer alone. See id. at B(1)(a)-(f). On January
24, 2017, Valero, Shell, and Motiva exercised this right, impleading Cenac’s
Primary 1 and Excess 2 Insurers pursuant to Federal Rule of Civil Procedure 14.
They claimed that the Excess Insurers, by virtue of Louisiana’s Direct Action
Statute, were liable to Valero, Shell, and Motiva for all damages sustained in
the accident that were the fault of Cenac.
Valero, Shell, Motiva, and the Excess Insurers 3 then quarreled about
whether the primary P&I policy, issued by the Primary Insurers and followed
by all Excess Insurers, had language indicating that the insurers could limit
their liability to that of the Loretta G. Cenac. That is, whether the P&I policy
contains a “Crown Zellerbach clause.” See Crown Zellerbach Corp. v. Ingram
Indus., Inc. 783 F.2d 1296 (5th Cir. 1986) (en banc).
1 Continental Insurance Company and AGCS Marine Insurance Company are Cenac’s
Primary insurers and provide a policy with $1 million in coverage. They will collectively be
referred to as the Primary Insurers throughout this opinion.
2 New York Marine and General Insurance Company and Stonington Insurance
Company National Specialty Insurance Company (“First Excess Insurers”) are Cenac’s First
Excess Insurers and provide policies with $29 million in coverage. Certain Underwriters at
Lloyd’s of London (“Second Excess Insurers”) are Cenac’s Second Excess Insurers and provide
policies with $70 million in coverage. The First and Second Excess Insurers will be
collectively referred to as the Excess Insurers throughout this opinion.
3 The Primary Insurers did not oppose the partial motion for summary judgment. On
appeal the Primary Insurers maintain a hands off approach. Their brief on appeal simply
explains that they are unaffected by the outcome of this appeal because the limitation fund
posted by Cenac exceeds the $1 million limit of their policy.
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Valero, Motiva, and Shell filed a motion for partial summary judgment
to settle the Crown Zellerbach issue. On September 6, 2017, the district court
sided with the Excess Insurers, denying the motion. More specifically, the
district court concluded that the following provision satisfied Crown
Zellerbach’s requirements for an insurer to limit its liability:
The Assurer hereby undertakes to make good to the Assured or the
Assured’s executors, administrators and/or successors, all such
loss and/or expense as the Assured shall as owners of the
vessel named herein have become liable to pay and shall pay
on account of the liabilities, risks, events and/or happenings herein
set forth . . . .
Valero, Motiva, and Shell timely appealed on October 5, 2017. They assert
that this court has jurisdiction to hear the appeal pursuant to 28 U.S.C. §
1292(a)(3).
II. JURISDICTION
The Excess Insurers contend that this court lacks jurisdiction to hear
this interlocutory appeal under § 1292(a)(3) because the district court’s Order
and Reasons fails to “determin[e] the rights and liabilities of the parties.” We
agree.
Although this court must satisfy itself of its own jurisdiction, Valero,
Shell, and Motiva “‘bear[] the burden of establishing this court’s appellate
jurisdiction over this appeal,’ and there is no need to explore jurisdictional
bases the appellant does not address.” Thibodeaux v. Vamos Oil & Gas Co.,
487 F.3d 288, 293 (5th Cir. 2007). This court’s appellate jurisdiction is
ordinarily limited to “final decisions of the district courts of the United
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States.” 4 28 U.S.C. § 1291. Where permitted by statute, however, this court
may hear interlocutory appeals satisfying certain requirements.
Relevant here, § 1292(a)(3) provides that appellate courts may entertain
appeals from a district court’s “[i]nterlocutory decrees . . . determining the
rights and liabilities of the parties to admiralty cases.” This circuit has
construed the grant narrowly, hewing closely to the statute’s “original purpose
of permitting appeals from orders finally determining one party’s liability to
another and referring the action for a computation of damages.” Hollywood
Marine, Inc. v. M/V Artie James, 755 F.2d 414, 416 (5th Cir. 1985) (Rubin, J.).
This court looks beyond the characterization of the ruling at issue and to the
substance of what the lower court decided. See Treasure Salvors, Inc. v.
Unidentified Wrecked & Abandoned Sailing Vessel, 640 F.2d 560, 564 (5th Cir.
1981).
We have clarified that appellate jurisdiction is generally appropriate
“whenever an order in an admiralty case dismisses a claim for relief on the
merits.” Francis ex rel. Francis v. Forest Oil Corp., 798 F.2d 147, 149 (5th Cir.
1986) (per curiam). That is not to say that all claims (or rights and liabilities)
of all parties must be determined before this court may invoke jurisdiction;
rather, the heartland of this court’s jurisdiction over an interlocutory appeal
under § 1292(a)(3) is a conclusive determination of the rights and liabilities as
to the claim on appeal. See In re Complaint of Ingram Barge Co., 517 F.3d 246,
247 (5th Cir. 2008) (“Interpreting Section 1292(a)(3), we then held ‘that in
admiralty the liability of only one party need be determined for an
interlocutory appeal to lie.’”).
4 Notably, one of Appellants’ counsel conceded during oral arguments that there was
nothing precluding this court’s review of the ruling at issue after a final judgment.
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For example, in In re Ingram Towing Co., this court concluded that
jurisdiction was not proper under § 1292(a)(3) where the district court did not
determine liability or determine that a party could never bring a claim against
the opposing party. 59 F.3d 513, 516–17 (5th Cir. 1995). In other words, this
court lacked jurisdiction to hear an appeal of a district court’s determination
of “how and where the rights and liabilities would be determined.” Id. at 517.
Similarly in Hollywood Marine, this court held that an order finding that an
insurer could not deny coverage under its policy did not provide appellate
jurisdiction under § 1292(a)(3). 755 F.2d at 415–16. The Hollywood panel
explained that jurisdiction under the statute is not appropriate where “the
party whose contention is rejected remains in the litigation and the issue of its
liability on the claim asserted remains to be finally resolved.” Id. at 416. The
decision did not “completely cut off” a party’s ability to pursue the claim. See
Crews v. Arundel Corp., 386 F.2d 528, 530 (5th Cir. 1967). As this court plainly
stated in Hollywood, § 1292(a)(3) offers no appellate jurisdiction where the
district court’s order “does not conclusively determine [a party’s] ‘rights and
liabilities’ as to the claim asserted.” Hollywood Marine, Inc., 755 F.2d at 416.
The principal dispute on the jurisdictional question in this case revolves
around the applicability of this court’s per curiam decision in Bucher-Guyer AG
v. M/V Incontrans Spirit, 868 F.2d 734 (5th Cir. 1989) (per curiam). The Excess
Insurers argue that the decision governs this case. First, they note that
Bucher-Guyer is particularly instructive because the court held that we lack
jurisdiction over an appeal of a district court’s order stating that a statutory
limitation on damages was applicable to a case. The court would still have to
remand the case to the district court for a decision on whether the party
entitled to a cap on its liability was actually liable. The Excess Insurers press
that the same logic applies here. Valero, Shell, and Motiva distinguish Bucher-
Guyer by arguing that the court’s decision there did not concern the grant of a
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substantive right, as here, and concerned a statute—the U.S. Carriage of
Goods by Sea Act—that has no bearing on this case. Lastly, Valero relies on
Wallis v. Princess Cruises, Inc., where the Ninth Circuit held that a district
court’s conclusion concerning an insurance contract provision was appealable
because, among other things, a holding to the contrary “would make
interlocutory appeals impossible in many admiralty cases, and would do so in
precisely those cases where appeals are most needed.” 306 F.3d 827, 834 (9th
Cir. 2002). In the same vein as their approach to Bucher-Guyer, Valero, Shell,
and Motiva argue that this court has appellate jurisdiction because the district
court, in denying their motion for partial summary judgment, granted the
Excess Insurers rights that did not exist before that decision. In other words,
the district court determined that Cenac could actually limit that liability
based on an insurance contract clause. This determination was the final
pronouncement on the extent of the Excess Insurers’ liability in this case. That
finality is not diminished, they urge, merely because the district court did not
rule on the issue of liability. It is sufficient that the boundaries and limits of
liability are now set in stone.
The Excess Insurers present a more persuasive view of this jurisdictional
dispute. In Bucher-Guyer, this court held that the applicability of a $500
limitation on liability pursuant to the Carriage of Goods at Sea Act (“COGSA”)
was not a determination of a party’s rights and liabilities for purposes of §
1292(a)(3). Bucher-Guyer, 868 F.2d at 735; see also Hager v. Laurelton Welding
Serv., Inc., 124 F. App’x 104, 106–07 (3d Cir. 2005) (unpublished) (Scirica, J.)
(expressing agreement with Fifth Circuit approach to issue of “whether orders
regarding limitations of damages are appealable under § 1292(a)(3)”).
The fundamentals of Bucher-Guyer bear a striking resemblance to this
case. There, the district court determined the boundaries of a party’s liability—
$500—based on the applicability of statutory language. Nevertheless, whether
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the opposing party was entitled to anything and, if so, how much was still to
be determined. In this case, the court decided the boundaries of a party’s
liability through determination of whether a contractual provision permitted
them to do so. Whether Valero, Shell, and Motiva are legally permitted to
recover anything from the Excess Insurers and, if so, how much remains to be
determined. That question turns on the fault and or liability of the Loretta G.
Cenac. Answering the important, but ancillary, question about the extent of
the insurer’s potential liability leaves the heart of the claim to be decided.
Valero, Shell, and Motiva attempt to dismiss the relevance of this
decision because: (1) Bucher-Guyer does not address an insurance policy
provision; (2) the statute at issue in that case—the U.S. Carriage of Goods
Act—has no bearing on this case; and (3) here the district court did not find a
statutory right to entitlement; rather, the focus was on a policy provision.
Valero, Shell, and Motiva advance these arguments despite asking this court
to instead rely on Wallis—a case that rejects the first two of their proffered
distinguishing features.
In Wallis, the Ninth Circuit addressed whether that court had appellate
jurisdiction over a district court’s determination of the applicability of a
contractual limitation of liability provision. In analyzing that issue, the Ninth
Circuit explained that § 1292(a)(3) case law concerning the Carriage of Goods
at Sea Act was instructive. 306 F.3d at 832–35.
Beyond not being helpful to Valero, Shell, and Motiva’s attempt to
distinguish Bucher-Guyer, Wallis expressly noted that the panel disagreed
with and would not follow this court’s interpretation of § 1292(a)(3). Id. at 833–
34 (collecting cases from other circuits, including the Fifth Circuit, and stating
“[w]e think that these other circuits have read § 1292(a)(3) too narrowly”).
However, we stand by Bucher-Guyer. We also find persuasive the Eleventh
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Circuit’s reasoning in Wajnstat v. Oceania Cruises, Inc., addressing a similar
issue to the one we analyze here. 684 F.3d 1153 (11th Cir. 2012) (Carnes, J.).
In Wajnstat, the Eleventh Circuit analyzed whether § 1292(a)(3)
permitted the appeal of a district court order determining whether a
“limitation-of-liability provision in a cruise ticket contract was unenforceable
and, as a result, inapplicable.” Id. at 1155. Citing to this circuit’s § 1292(a)(3)
jurisprudence, the Wajnstat panel held that a district court’s order denying a
motion for partial summary judgment on a limitation-of-liability affirmative
defense failed to meet the requirements of § 1292(a)(3). Id. at 1155–56.
Announcing a rule that is eminently reasonable, the Eleventh Circuit
explained as follows:
If, as [the Fifth Circuit in] Ford Motor Co. held, a district court
does not determine the “rights and liabilities of the parties” when
it decides the applicability of a statutory limitation of liability, it
also does not determine the “rights and liabilities of the parties”
when it determines the applicability of a contractual limitation of
liability.
Id. at 1155.
We find no compelling reason to distinguish between a district court’s
determination of a contractual entitlement rather than statutory entitlement
to limit liability. 5 Neither decision is reviewable on appeal under § 1292(a)(3).
We join the Eleventh Circuit in so holding.
5 It is true that Crown Zellerbach refers to the “right to assert [a] policy defense.” 783
F.2d at 1300 (emphasis added). And thus, according to Valero, Shell, and Motiva,
determination of the applicability of such a clause determines the Excess Insurers’ rights.
This argument is essentially what one of Appellants’ counsel referred to as their “plain
language” argument. This point is much too fine. Valero, Shell, and Motiva’s argument that
the district court determined the Excess Insurers’ “right” to limit liability falls in the face of
the simple fact that, distilled to its essence, the determination is about ascertaining whether
a party is merely permitted to limit its liability should the insured be found able to do so.
Crown Zellerbach acknowledged that even those insurers who can qualify for limitation of
liability under the issued policy must demonstrate “a right to it by,” among other things,
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If the district court had determined that the Excess Insurers via the
shipowner’s liability were not entitled to exoneration or limitation—requiring
a determination of actual liability and having res judicata effect—jurisdiction
would likely be appropriate. See, e.g., Republic of France v. United States, 290
F.2d 395, 397 (5th Cir. 1961) (exercising appellate jurisdiction over denial of
exoneration or limitation of liability where the district court concluded that
appealing party was negligent and thus not entitled to limitation). Similarly,
the court has expressed willingness to hear appeals where indemnity or
coverage by an insurer of an insured is altogether denied. Thibodeaux, 487
F.3d at 292–93 n.1 (“An order denying indemnity completely settles the third-
party’s liability as to both the plaintiff and the principal defendant, as it
establishes that the third party has no liability whatsoever.”). These scenarios
are not present here.
Shell, Motiva, and Valero also rely on this court’s decision in Gabarick v.
Laurin Maritime (America), Inc., when asserting that this court has exercised
jurisdiction over interlocutory admiralty appeals under § 1292(a)(3) where, as
here, the trial court interpreted part of a marine insurance policy before any
liability determinations had been made. 649 F.3d 417, 420–21 (5th Cir. 2011).
Notwithstanding that errant characterization, Gabarick does not govern the
jurisdictional inquiry in this case. In Gabarick, excess underwriters filed an
interpleader complaint in the district court seeking release from further
liability under the excess policy upon deposit of their policy limit of $9 million
into the court’s registry. Upon deposit of this amount, all claims by and against
the excess underwriters would be dismissed. Id. at 420. The district court
having the vessel owner “establish that the casualty occurred without the [vessel] owner’s
privity and fault.” Id. at 1303. In other words, irrespective of the applicability of a limitation
of liability insurance provision, under Louisiana’s Direct Action Statute, “there must be a
legal liability on part of the assured for the insurer to have a direct action liability.” Id. at
1301. Section 1292(a)(3) does not confer jurisdiction under these circumstances.
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concluded, contrary to the underwriters’ contention, that they owed
prejudgment interest on their policy limit. Id. The district court’s decision
conclusively determined what amount the excess insurers would be required
to submit to be dismissed from the action. Id. Accordingly, the panel concluded
that the district court’s decision requiring the insurers to deposit more than
they believed appropriate before they would be dismissed from the case
“affected a ‘liability.’” Id. at 421. Suffice it to say that whatever the import of
Gabarick for its jurisdictional analysis, that case simply does not guide us
where the underlying district court order determines a party’s entitlement to
a contractual limitation of liability. 6
III. CONCLUSION
For the foregoing reasons, this appeal is DISMISSED for lack of
jurisdiction.
6 Our conclusion is not changed by the Federal Rule of Appellate Procedure 28(j) letter
filed by Motiva and Shell after oral argument. The cases cited, similar to Gabarick,
conclusively decided how much a party was required to deposit to satisfy their legal or policy
obligations. It is fair for Motiva and Shell to make clear that this court has exercised
jurisdiction prior to a final determination of liability in a case. But, again, the question
preceding the determination of liability matters. Where the question, as here, is whether a
potentially liable party may limit his liability, §1292(a)(3) does not afford this court
jurisdiction where the underlying claim for liability has not been adjudicated. Moreover, as
Motiva and Shell ostensibly concede, the cited decisions did not meaningfully analyze the
jurisdictional question. Stated simply, where the district court answers the question of
whether a party may, under a contractual provision, limit his liability should the liability
question be determined in his or his insured’s favor, we will not exercise jurisdiction.
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